Lucas Chancel is an economist specialising in global inequality and the social issues surrounding the ecological transition. He is a professor at Sciences Po, within its Research Centre on Social Inequalities and Department of Economics. He is also co-director of the Laboratory on Global Inequalities at the Paris School of Economics and senior advisor to the European Tax Observatory.

Benjamin Joyeux: We often hear about climate inequality, but what does it mean exactly?

Lucas Chancel: I am interested in how different kinds of inequality relate to environmental issues. Who pollutes? Who is affected by pollution? Who can afford to pay for decarbonisation? And how does the ecological transition run up against questions of inequality?

Climate inequality has at least three aspects. First, unequal exposure to the impacts of climate change. As individuals, we are not all affected in the same way. Nor are countries affected in the same ways: some places face higher levels of warming than others. And for countries that are already experiencing high temperatures, an extra degree is not the same as for places with more moderate climates. Within countries, living standards, income, and wealth significantly affect how vulnerable people are to climate shocks.

Second, inequality of responsibility. There are very clear differences both between rich and poor countries and within each country. In rich countries, there are big polluters and much smaller ones. Poor countries pollute less on average, but the elites of the emerging world, who like to hide behind the multitude, are often found among the major polluters.

Finally, there is inequality in the capacity to act. We are not all equally able to act on the transition: to change our car, renovate our home, or protect our house from drought or flooding.  At the global level, the Climate Inequality Report 2023 finds that the half of the world with the lowest emissions – more or less the least well-off – is responsible for only 12 percent of total emissions. Yet this half will bear 75 percent of the damages caused by climate change as measured by relative income loss. To pay for the transition, you need assets, and so there is a glaring asymmetry in the capacity to act. That the world is very unequal is a surprise to no one, but the level of inequality is extremely striking. The poorest 50 percent of the world owns less than 3 percent of the world’s wealth.

These three dimensions of global climate inequality – exposure to climate shocks, responsibility for emissions, and capacity to act – illustrate the immense tensions of today’s world. Those who are most affected are those who pollute the least and have the least capacity to act on the problem.

How will the impacts of climate change deepen existing inequalities?

Climate impacts have already aggravated inequalities between countries. We are already 1.3 degrees above pre-industrial levels, and tropical and subtropical countries have been hit hardest. Even at this stage, poorer countries would have more economic resources at their disposal were it not for the damage caused by rising temperatures.

Within societies, climate change represents a series of shocks: heatwaves, floods, companies that are forced to relocate, and so on. These shocks have the greatest impact on the poorest, who have no financial cushion to help them bounce back. In poor countries, the poorest 40 percent of the population may be affected 70 percent worse than the population average. The same is true in rich countries – one example is Hurricane Katrina in the USA. Environmental disasters affect different parts of the population in different ways.

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On the one hand, there is the unequal nature of exposure to risks. Some neighbourhoods are closer to flood zones and others lie on higher ground. Most of the time, the neighbourhoods that are less prone to flooding are the oldest and most affluent. Of course, anyone can be affected by climate shocks, but the poor tend to be affected most. Beyond the climate issue, it is low-income urban areas that are typically close to industrial zones and chemical-risk zones. An example is Seveso in northern Italy. [A 1976 industrial accident at a petrochemical plant in this town is widely considered one of the worst human-made environmental disasters of all time.]

On the other hand, there are also unequal vulnerabilities to risks: not only are poorer people more exposed, but their homes are built with lower-grade materials, and they may have nothing to fall back on financially. One of the great fundamental inequalities of our contemporary societies, whether in France, Uganda, or the United States, is that about half of the population has no assets, so no financial cushion. Climate change spells the multiplication of these shocks and it will therefore deepen such inequalities in our already unequal societies. But not everything is written in the stars. A strong welfare system and forms of universal social insurance can break these vectors of inequality. Social protection is therefore one of the key challenges of our time. How do we increase the level of social protection in rich countries, and how do we create new welfare systems in less rich countries? The welfare state needs to take account of new environmental risks that were not on the agenda of its founders at the end of the Second World War.

A strong welfare system and forms of universal social insurance can break these vectors of inequality. Social protection is therefore one of the key challenges of our time

Except that limits to growth, ageing populations, and the changing global economy all make welfare states harder to fund. Can we honestly afford to extend social protection to mitigate environmental risks as well as poverty?

Let’s remind ourselves of something essential: from an economic point of view, our countries have never been as rich as they are today. France has never been this rich. The United States has never been this rich. The real problem is distribution, between private wealth and that which is owned collectively by the state, local authorities, and non-profit organisations. The question is not the total level of wealth, but who owns it. If anyone argues that we can no longer afford anything, remind them that we have phenomenal room for manoeuvre. We can look for resources and find new revenues, especially from wealth. Capital has been undertaxed for decades and has grown continuously.

The limits to growth and demographic ageing do pose real challenges, however. The social protection systems implemented at the end of the Second World War were created in a world of robust growth: catch-up growth, reconstruction growth, and “Les Trente Glorieuses” [a 30-year economic growth period in France, which began in 1945], as well as the baby boom, which has today become the grandparent boom. How can we adapt solidarity mechanisms built for a past era to a world of low growth or even decline? We need to rework financing mechanisms to break the link to GDP growth and tax the stock of wealth (assets) rather than the flows (GDP). Disconnecting the financing of the welfare state from GDP means seeking more resources from the wealthiest and from the transmission of wealth through inheritance.

We also need to look at the under-recognised costs of environmental degradation. For instance, a large proportion of today’s chronic diseases are related to environmental factors. Improving the state of our environment must therefore be part of our thinking on a systemic framework for social protection. Prevention should be a much more integral part of our health policies, thus reducing the pressure on funding.

The real cost of environmental damage is grossly underestimated. Taking it more into account would reduce the cost of environmental action. Fossil fuels receive hundreds of billions of euros in subsidies every year. Meanwhile, the cost to health systems is enormous in terms of respiratory and cardiovascular diseases. If we cut fossil-fuel subsidies, we would gain room to manoeuvre to the tune of several hundred billion euros per year.

To what extent does inequality explain the new environmental conflicts emerging in Europe? Take the water conflicts in France and Spain or the farmers’ protest in the Netherlands.

Unequal access to decision-making is at the core of these environmental conflicts, which reflect the interests of powerful actors with elite-level contact lists. As described by [Catalan economist] Joan Martinez Alier, who has mapped cases of environmental injustice globally, these environmental conflicts form a kind of “International of Struggles”: we find similar tensions across Europe, but also in the Amazon and in Africa. There is a dialectic of, on one side, public authorities who justify certain decisions using an economic metric and, on the other, activists who put forward other forms of legitimacy, for example the safeguarding biodiversity or respect for a broader democratic process. The question of how to go about the ecological transition in the face of emergency calls for more democracy, not less. Decisions represent wasted time when they are taken by small committees simply to defend established interests.

Carbon pricing is key to the European Green Deal, and it will be extended to housing and transport in the coming years. It seems to be effective as an instrument but also socially regressive. Does the risk of a backlash not demand another approach to the climate problem?

Experts have been warning for 20 years that if there is no social reform tied to carbon pricing, then we have all the ingredients for an explosion. In fragmented, tense societies where people are already struggling to move around because of a lack of access to public transport and where an expensive electric car is simply unaffordable, extending carbon pricing to individual transport could be socially devastating. This was the exact spark that set off the Gilets Jaunes protests in France in 2018. The main problem with carbon pricing is that it is socially blind. The European Green New Deal was supposed to have been designed for low-income households, but the redistribution and support measures built into the Green Deal are clearly not enough to prevent Gilets Jaunes-type movements.

We are entering a phase where everyone will have to make a considerable effort to transform their lifestyles’

Carbon pricing should be a means to an end – namely the reduction of carbon emissions. An intermediate end is making environmentally-friendly goods and services cheaper and making those that pollute more expensive. If there are no affordable alternatives to polluting goods and services, there will be no reduction in carbon emissions, and people’s purchasing power will suffer. The other, often-overlooked route to reducing the price gap between what pollutes and what does not is subsidising greener options. Doing both at the same time is even better. The US version of the Green Deal, the Inflation Reduction Act, makes a bet on the subsidy option. In the American debate, the carbon tax is a bogeyman, and so the US is moving forward through massive public subsidies. A whole portion of the US car industry will benefit from subsidies for electric cars and low-carbon energy production. In Europe, we need the carrot and the stick. Just relying on the stick would be socially damaging in the absence of greater support for poorer households.

What about the carbon consumption of the richest in society? How far will banning private jets actually get us?

Every extra tonne of carbon in the atmosphere counts, so this issue is not just a gimmick. A private jet produces more tonnes of CO2 in an hour than most people’s commutes do in a year. But it is even more important than that. We are entering a phase where everyone will have to make a considerable effort to transform their lifestyles. How can we expect the middle and working classes to do their part if the people at the top of the ladder continue to emit the equivalent of a year’s worth of carbon in a few minutes?

Historically, when politicians turned to their populations to ask for major sacrifices, the wealthy were made to play their part too. In an April 1942 speech [setting out a seven-point national economic policy designed to adapt the US economy for war], Franklin D. Roosevelt asked his fellow Americans to make huge sacrifices. He also asked Congress to ensure that the income of the wealthiest remained below a certain limit. It is a question of social cohesion and a new social contract for the transition. In France, airlines can no longer sell tickets for routes that can be travelled by train in under two and a half hours. But this does not apply to private jets. A hole in the scheme is a hole in the social contract.

Should the EU step in to regulate this kind of issue?

In a world where the issues are global, the largest scale is always the most relevant. But that does not mean we should not start at the national level. And that is often the problem. The supranational level is too often used as an excuse for inaction. EU member states need to coordinate, but they must start to act. The European agreement on a windfall tax on energy companies was only made possible because some countries decided to go it alone. The European political consensus was built on unilateral measures.

Cities and regions often deal with climate impacts. National governments are responsible for taxation and social security. Europe’s Green Deal frames the transition, and all of these sit under global climate agreements and, ultimately, our planetary system. What is the most relevant level for fighting climate inequality?

What’s fascinating but also dizzying about this transition is that all levels are interconnected. You have to start at the local level and work your way up to the national, European, and international levels. Slowness and frustration at one level cannot be used to justify inaction at another. On climate inequalities, there is so much to do locally on damage and risk exposure – from urban and regional planning through public policies that benefit the poorest instead of targeting them. The greening of cities and the transformation of food systems will benefit those on the frontline of heatwaves, food-price inflation, and drought.

The national level is relevant for making laws and providing financial resources, and the European level can help pool risks. Sharing energy means thinking on the largest scale. A wind- and solar-powered electricity grid needs to be interconnected with other territories, for instance on days when there is not enough wind or sun. But the same logic can also apply to the ability to bounce back from shocks like hurricanes. The bigger the pool of risk sharers, the better insurance works. That is the principle of national social security.

A European welfare state will allow us to share risks even more effectively. But it will mean creating European fiscal resources. While this is slowly emerging, we are still far from the famous “Hamiltonian moment” of American federalism. The European budget is around 2 percent of GDP, while most member states have national budgets of around 50 percent of GDP. We need to federalise both resources and spending if we are to tackle the environmental inequalities of the future.

👉 Original article on Green European Journal


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